What is Probate?

Probate is the legal process through which the court makes sure that your Will is valid, your debts are paid and your assets are distributed properly.

Why Probate?

The purpose of probate is to establish clear title or ownership to your assets after your death. Before your assets can be transferred to your children or other beneficiaries, the probate court has to determine and settle your debts, establish clear title to everything you own and then distribute the estate according to your Will or to the State’s intestate succession statutes.

You may be wondering why your assets would have to go through probate even though you have a Will. The reason is simple. If your name is on the title to an asset and you die, probate is the legal way to take your name off the title and put the new owner’s name on it.

Does Every Estate Have to Go Through Probate?

The size of the estate determines whether it will be probated. In California, if the value of real property exceeds $50,000 or if the total value of the estate exceeds $150,000, the estate will need to be probated. If your estate is under the allowed limit, a simple affidavit procedure may be substituted for the lengthy and costly probate process. However, since the value of most land or homes in California exceeds $50,000, few people are spared from the probate process.

Do All Assets Have to Go Through Probate?

Not everything you own will automatically need to go through probate. For example, a jointly owned asset that passes to a surviving spouse will generally avoid probate. However, after the second spouse’s death, the asset may have to go through the probate process if it is titled only in the spouse’s name. Also, assets with named beneficiaries such as insurance policies, IRA’s and annuities, will pass to the designated beneficiaries without going through probate.

Which Assets Need to be Probated?

Assets owned individually by a decedent

Assets which the decedent owned as a tenant in common

Life insurance, annuities and retirement assets WITHOUT beneficiary designations, or that name the “Estate” as the beneficiary, or if the estate receives the assets because the named beneficiaries are deceased

Assets Which Do Not Need to be Probated

Assets owned jointly with right of survivorship

Life insurance, annuities & retirement assets with valid beneficiaries designations other than the estate

Bank accounts and other assets with “pay on death” (POD) or trust designations

Securities or security accounts to be “transferred on death” (TOD)

Assets in trust if the trust instrument includes a plan for distribution after death

Aspects of Probate to Consider

Cost:

Attorney’s fees and Executor’s fees in California are set by statute, and are based on the value of the estate, without taking into account liabilities of the estate, such as mortgages or other debts. The fees are calculated as follows:

4% of the first $100,000.00

3% of the next $100,000.00

2% of the next $800,000.00

1% of the next $9,000,000.00

½ of 1% of the next $15,000,000.00

For estate assets above $25,000,000.00, a reasonable fee will be determined by the court.

As an example, if the value of an estate in California is $1,000,000.00, the total amount paid for attorney’s fees would be $23,000.00. The fees for the executor or administrator of the estate are set according to the same schedule, so their fees would be an additional $23,000.00, making the probate fees a total of $46,000.00 for a $1 million estate.

Length of Probate:

Many individuals assume that they have a simple estate and do not have to worry about a long probate process. This misconception is very common. However, for most estates, the probate process will take anywhere from six months to two years. In many cases, it can take longer. Regardless of how simple an estate appears to be, it is rare to see an estate go through probate in less than six months to nine months.

Lack of Privacy:

All probate transactions are a matter of public record. Anyone can find out the size, contents, and beneficiaries of your estate. This can be embarrassing and frustrating for your family, create disputes, and expose your family to unscrupulous solicitors.

Loss of Control:

The Probate Court controls the entire process.

Where are Probate Proceedings Held:

Probate proceedings must be held in each state where the decedent owned property.

Who Will Be Responsible to Take My Estate Through Probate After I Die

There is no watchdog. The simple answer to this question is that no one will tell your children to go through probate, they will simply have no choice. Once you pass away, your children will not be able to transfer title or access accounts without probate court approval.

A Living Trust is a Better Alternative

A Living Trust is a way to protect your family from the time, expense and inconvenience associated with probate, not to mention the stress. Even at best, probate can be an unpleasant, emotionally trying experience. With a Living Trust, your assets can be efficiently transferred to your beneficiaries without the need for court involvement, and generally at significantly less expense.